Top 5 Reason Codes and How to Respond

Sydney VaccaroReason CodesLeave a Comment

Top 5 Reason Codes and How to Respond

Reason codes are a vital part of dispute management. Their purpose is not only to inform merchants why they are receiving a dispute, but to also point merchants in the direction of what is causing the disputes. In this post, we'll go over the top five reason codes and the main pieces of evidence needed to respond to these disputes.

What are Reason Codes?

Reason codes are codes of letters and numbers that are provided in the dispute notification. This code explains the cause of the customer dispute. Reason codes are created and updated by the major card networks: American Express, Discover, MasterCard, and Visa. Other payment service providers, like Braintree, Stripe, and PayPal, have their own categorization of reason codes. However, the disputes themselves are still categorized by the issuing bank based on the card network issuing the payment card.

Reason codes exist to provide understanding into why a dispute occurred and what specific documentation should be provided in a dispute response for merchants who want to challenge the dispute. A dispute response is the most powerful and more likely to win when it contains the specific, compelling evidence based on the reason code and transaction modifier.

To create the most effective dispute response possible, you need to understand why a transaction was disputed in order to properly present a solid case to win the chargeback.

Top Reason Codes and How to Respond

At Chargeback, our clients use our app to respond to disputes. The following list of reason codes is the top five that we see our app used to respond to. Depending on your industry, billing model, or other factors, not all of these reason codes may be relevant to you.

1. Visa 10.4 Other Fraud - Card Absent Environment

What Does Visa 10.4 Mean?

The cardholder claims they did not authorize or participate in a transaction conducted in a card-not-present environment. Or that a fraudulent transaction was completed in a card-not-present environment using an account number for which no valid card was issued or is outstanding, and no authorization was obtained.

How to Respond to Visa 10.4?

The goal when responding to this dispute is to prove that the cardholder did authorize the transaction. To prove that the cardholder participated and authorized the transaction, provide evidence that shows:

  • The cardholder made their purchase in their account or with a loyalty program profile
  • The cardholder gave someone else permission to make the purchase
  • The cardholder is using the product or service
  • The cardholder has a previous transaction history with the company

For a full guide on what evidence is required, download our Visa 10.4 response templates:

Visa 10.4: CNP, Digital Goods Template

Visa 10.4 : CNP, Physical Goods Template

Visa 10.4: CNP, Recurring Billing Template

2. Mastercard 4837 - No Cardholder Authorization

What Does Mastercard 4837 Mean?

The cardholder claims that they did not engage in the transaction.

How to Respond to Mastercard 4837?

To respond to this reason code, provide evidence such as:

  • The cardholder received the goods by showing shipping and delivery information
  • The cardholder participated in post-transaction customer service communications
  • The cardholder has made previous undisputed transactions
  • The cardholder registered the disputed product

For a full guide on what evidence is required, download our Mastercard 4837 response templates:

MasterCard 4837: CNP, Digital Goods Template

MasterCard 4837: CNP, Physical Goods Template

3. Visa 13.7 - Cancelled Merchandise/Services

What Does Visa 13.7 Mean?

The cardholder claims that the merchant charged them for a merchandise/service that was cancelled.

How to Respond to Visa 13.7?

To respond to this reason code, the merchant can provide evidence that shows:

  • The cardholder tried to return the merchandise but you refused the return
  • The cardholder was properly informed of your return or cancellation policy at the time of the sale
  • The cardholder did not comply with your return or cancellation policy
  • The cardholder is still using the good/service

4. Visa 13.1 - Services Not Provided or Merchandise Not Received

What Does Visa 13.1 Mean?

The cardholder claims that they participated in the transaction, but the cardholder or an authorized person did not receive the goods or services because the merchant was unwilling or unable to provide the goods or services.

How to Respond to Visa 13.1?

To respond to this reason code, the merchant can provide evidence that shows:

  • The cardholder received the merchandise
  • The cardholder has made previous undisputed transactions
  • The cardholder has possession of or has access to the product or service
  • The cardholder participated in written correspondence exchanged between the merchant and the cardholder
  • The cardholder’s family, household, or someone who was authorized by the cardholder made the transaction

For a full guide on what evidence is required, download our Visa 13.1 response templates:

Visa 13.1 : CNP, Digital Goods

Visa 13.1 : CNP, Physical Goods

Visa 13.1 : CNP, Recurring Billing

Visa 13.1 : CNP, Travel and Entertainment

5. Visa 13.2 - Cancelled Recurring Transaction

What Does Visa 13.2 Mean?

The cardholder is claiming they withdrew permission to charge the account for a recurring transaction or, in the Europe Region, an installment transaction. It can also mean the acquirer or merchant received notification that the cardholder's account was closed or, in the Europe Region, facilities were withdrawn or the cardholder was deceased before the transaction was processed.

How to Respond to Visa 13.2?

To respond to this reason code, the merchant can provide evidence that shows:

  • The cardholder did not cancel the recurring payment plan in accordance with the merchant's policy
  • The cardholder has made previous undisputed transactions
  • The cardholder has possession of or has access to the product or service
  • The cardholder participated in written correspondence exchanged between the merchant and the cardholder
  • The cardholder's family, household, or someone who was authorized by the cardholder made the transaction
  • The cardholder did not cancel the reservation in accordance to the merchant’s published policies

For a full guide on what evidence is required, download our Visa 13.2 response templates:

Visa 13. 2 : CNP, Digital Goods, Recurring Billing 

Visa 13. 2 : CNP, Physical Goods, Recurring Billing